Meadows Urquhart Acree and Cook, LLP

  • Our Services
  • About Us
    • Meet Our Team
  • Our Culture
    • CPA & Accounting Careers
  • News & Resources
    • Cash Flow Resources
  • Contact Us
  • For Clients
    • Pay My Invoice
    • Send A File
    • SafeSend Returns
    • Previous Portal
    • FAQs
You are here: Home / News & Resources / Year-End Charitable Giving

12/21/2021 by Desiree Lee, CPA

Year-End Charitable Giving

Child Tax Credit 2021

During the gift-giving season, if charities are on your recipient list, here are a few important things to remember:

$300/$600 Charity Deduction for Non-Itemizers

COVID tax relief packages included legislation to incentivize charitable giving.  For individuals who take a standard deduction on their 2021 tax returns, IRC Sec. 170(p) allows a tax deduction of up to $300 for gifts, made in cash, donated directly to charity.  For 2021, this limit has also been increased to $600 for a married filing joint tax return.  The gifts need to be made in cash (i.e. not stocks or goods), and they need to be donated directly to the charity, meaning not via a donor advised fund (DAF).

100% AGI Limit on Cash Donations

COVID tax relief also lifted the AGI limitation on certain cash donations for 2020, which has been extended through 2021.  Individual taxpayers who itemize their deductions may deduct charitable donations of cash gifts up to 100% of their adjusted gross income (AGI).  This does not include cash gifts made to donor advised funds.  Those gifts are still limited to 60% of AGI, and stock donations to charities or DAFs continue to have 30% AGI limitations.

Bunching with a Donor Advised Fund

When the Tax Cuts and Jobs Act made material changes to itemized deductions, many taxpayers began using a standard deduction.  For those taxpayers who make charitable donations that do not exceed the standard deduction, it can help to utilize a bunching strategy with a large gift to a donor advised fund.  A taxpayer receives a charity deduction in the year they make a donation to their DAF, so taxpayers can put multiple years’ worth of charitable giving into their DAF and receive the tax deduction in Year 1.  The donations out of the DAF to the charities can then be spread out over multiple years.  This bunching strategy can make the donations more tax efficient by allowing a taxpayer to itemize deductions in one year and then take standard deductions the following years.

VA NAP and EISC Credits

The Commonwealth of Virginia has two programs that add additional benefit to donations made to approved charitable organizations.

For both Neighborhood Assistance Programs (NAP) and Education Improvement Scholarship Programs (EISC), a VA state tax credit can be issued for up to 65% of the donation value.

The Neighborhood Assistance Act Tax Credit Program has two programs.  One is administered by the Virginia Department of Education, and the other is administered by the Virginia Department of Social Services.  These programs provide VA state tax credits to individuals or businesses that make cash or stock donations to approved neighborhood organizations.  Additional information, including lists of current approved organizations, can be found at these sites:

https://www.dss.virginia.gov/community/nap.cgi

https://www.doe.virginia.gov/school_finance/neighborhood_assistance_act/index.shtml

The Education Improvement Scholarships Tax Credits Program is administered by the Virginia Department of Education, and it provides VA state tax credits for individuals or businesses that make cash or stock donations to eligible education foundations.  Additional information, including a list of current approved scholarship foundations can be found at this site:

https://www.doe.virginia.gov/school_finance/scholarships_tax_credits/

Approved organizations have received a certain allotment of tax credits for each tax year, so credit availability is specific to each organization.  If you are supporting any of the charities included on the lists, it is important to reach out to the Organization to inquire about credit availability.

We hope you have a terrific holiday season, and if we can help with any of your year-end charitable giving strategies, please contact us.

Filed Under: News & Resources

mm

About Desiree Lee, CPA

Desiree Lee is a partner at Meadows Urquhart. She specializes in individual and trust taxation. More about Desiree.

We're Hiring!
We're looking for exceptionally motivated professionals to join our fast-growing team. Apply Now!

DID YOU KNOW …

Not only does Meadows Urquhart provide accounting and tax services, but we’re also forward-thinking CPAs & consultants who take the time to step into our clients' shoes. We offer services for businesses, high-net-worth individuals, nonprofits and hedge funds.

Find out more about our services.

In Your Shoes

We're proud to be a part of this client's success story. Click on the shoes to learn more.
Riverside Outfitters
Riverside Outfitters


Meadows Urquhart is a CPA & accounting firm located in Richmond, VA.

Our Location

1802 Bayberry Court, Suite 102
Richmond, Virginia 23226
Phone: 804-249-5786
Fax: 804-249-5781
Contact Us

AGN International member

Follows Us

  • Email
  • Facebook
  • LinkedIn
Certified QuickBooks Pro Advisor Bill.com Expert Certified Certified QuickBooks  OnlinePro Advisor

Get Our Newsletter

Copyright © 2023 Meadows Urquhart Acree & Cook, LLP • All Rights Reserved

Home • About • Contact • Services

A Kinetic Website